Tag - appraisal

Westlake Realtor

My Home Appraised Below Purchase Price, Now What?

As your trusted Westlake realtor, we know the importance of an appraisal. A low appraisal can really end up making or breaking a deal. The reason for an appraisal in the first place is that lenders use the appraised value to calculate a loan-to-value ratio. This LTV ratio must stay within specific guidelines depending on what loan you are moving forward with. It is important to remember that the appraisal affects the loan-to-value ratio not the purchase price.
If an appraisal comes in low this decreases the amount the bank is willing to loan because it lowers the loan-to value. For example, if you are purchasing a home that is $200,000 with an FHA loan the max loan-to-value is 96.5% meaning that the greatest loan possible is $193,000. The rest of the purchase price will be made up with the down payment. However, if the appraisal comes back at $190,000 instead of $200,000 the bank can now only lend up to $183,350 because of the 96.5% loan-to-value. This now leaves the buyer short $9,650.
In the event of a low appraisal there are always four options available. The first option is to renegotiate the purchase price down to the appraised value. The second option is that the buyer has to put more down to make up for the deficit. The third option is that both parties can decide to cancel the contract entirely. The last option is to try and refute the appraisal with concrete evidence as to why the home is in fact worth the purchase price. This may include bringing forth evidence that was not previously shown at the original appraisal. As your trusted Westlake realtor our entire team is extremely familiar with the appraisal process. If you have any questions, we are always here to make sure you are comfortable with the process.

Westlake realtor

Real Estate Appraisals

As your local Westlake realtor and real estate team, we understand the value of a proper real estate appraisal. We also understand that the process of an appraisal may seem a bit confusing. Whether you are buying or selling a home a real estate appraisal is important because it helps to establish the homes actual market value. This valuation is required by every lender as they want to verify that the property is at least worth what they are lending. Therefore, it is important that the appraisal comes in at the value of the contract in progress.
A real estate appraisal should not be confused with a CMA. A CMA stands for a comparative market analysis. This is different from an appraisal but is used to compare comps in the area to help determine a proper listing or offering price. An appraiser may use a CMA as part of their evaluation but only as part of it as each home is different. The official appraisal is the only data that a lender will consider when lending. Every appraiser is licensed by the state and needs to be an objective third party. The appraiser should have no financial gain in the transaction.
Every appraisal will show the details about the entire property, the overall current real estate market, and any specific/significant flaws with the property. The entire process should only take a few hours but will cost upwards of $300 depending on the size of the home in question. An appraisal is typically good for 4-12 months. As your local Westlake realtor our team is here to help you understand the entire buying and selling process. If you have any specific questions about how a real estate appraisal affects you, please feel free to reach out to us at any time.

Hare and Associates